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Other Depository Institutions

Economics Project

Vanie Arbelaez

on 10 April 2013

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Transcript of Other Depository Institutions

A depository institution is a financial institution in the United States (such as a savings bank, commercial bank, savings and loan association, or credit union) that is legally allowed to accept monetary deposits from consumers. Federal depository institutions are regulated by the Federal Deposit Insurance Corporation (FDIC). OTHER DEPOSITORY INSTITUTIONS Savings Banks Commercial Banks A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.
Federal savings banks are insured by the Federal Deposit Insurance Corporation. The FDIC insures individual accounts up to at least, originally, $100,000, currently $250,000 possibly until the year 2014, joint accounts up to $200,000, and retirement accounts up to $250,000. Credit Unions A credit union is a member-owned financial cooperative, democratically controlled by its members, and operated for the purpose of promoting thrift, providing credit at competitive rates, and providing other financial services to its members.
Many credit unions also provide services intended to support community development or sustainable international development on a local level, and could be considered community development financial institutions. Commercial banks are banks that catered to the interest of business and commerce. They have the power to issue checking accounts. Checking accounts are also called Demand Deposit Accounts (DDAs)- Accounts whose funds could be removed by simply writing a check without prior approval from the depository institution. Other financial institutions, called thrift institutions or thrifts, accepted the deposits of the small investors but did not have DDAs until the mid-1970s. Federal Deposit Insurance Corporation (FDIC) The U.S. corporation insuring deposits in the U.S. against bank failure. The FDIC was created in 1933 to maintain public confidence and encourage stability in the financial system through the promotion of sound banking practices.
The FDIC will insure deposits of up to US$250,000 per institution as long as the bank is a member firm.
Before opening an account with a financial institution, be sure to check that it is FDIC insured. Savings and Loan Associations Another type of financial institutions savings in loan associations (S&L)- a depository institution that invests the majority of its funds in home mortgages. S&Ls began a cooperative clubs for the home builders in the 1800s. The association's members promised to deposit a certain sum regularly into the association. Members than took turns borrowing money to build a home.
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